Delivering the 2013 Budget, Osborne said the pledge to raise the tax-free allowance of £10,000 by 2015 has been brought forward to April 2014.
He also announced that three million of the lowest paid workers will pay no income tax at all.
Osborne said: "This is an historic achievement for hard working families and hard working people."
Leonie Kerswill, tax partner at PwC, told HR magazine: "This is excellent news and even though Osborne didn't have much money to manoeuvre with, he's found a way which will help lots of hard working people."
In his Budget last year Osborne announced he would be increasing employees' income tax allowance by £1,100 in April 2013, taking it to £9,025 in total and had pledged to reach the £10,000 threshold by April 2014.
